VolkBell began the exploration into health and wellness about eight years ago. It was something our partners would say, “Just made sense.” At the time, health care costs were skyrocketing across the nation, particularly in our home state of Colorado, and the nation’s obesity rates were at an all-time high. In our research, we observed a basic principle: A population making healthier lifestyle choices equals lower lifestyle-related medical claims, which equals an overall reduction to the nation’s health care expenditure.more

Our partners saw an opportunity to add value by promoting this principle; educating our clients and prospects using a wealth of communication tools we had available. Over the next 18 months, we obtained certifications in wellness coaching, wellness program management, fitness, and nutrition.

We began evolving our education campaigns for clients by sharing community resources, conducting needs and interest surveys, serving on client committees, coordinating health fairs, screenings and fitness challenges, and more.

The Value of Investment

We began to see the “value” in what we were providing our clients and prospects, but we also knew that in order to be good role models of health, we too needed to “walk the talk” and roll out our own employee wellness program.

We looked to our employees to tell us what they wanted in a program, and we were not sure, at the time, exactly what that would look like. “Stayin’ Alive” was branded in 2012 and our committee created a wellness mission statement “…to foster a culture of well-being through regular practice of healthful behaviors, awareness, role modeling, and camaraderie amongst ourselves and the community.”

With a focus on education, prevention, and early detection programs, our wellness program strives to provide the knowledge and tools for our employees and their families to make healthy lifestyle choices.

Our committee is comprised of representatives across departments and locations. These champions share the load of our program, chairing at least one activity each year. They are an integral part in the planning process and they motivate others throughout the year, truly taking “ownership” in the program.

Today, our program encourages teamwork, fosters relationships, and creates healthy competition. Employees support one another more than ever before! Whatever the activity, there is most likely another co-worker to do it with. Employees engage with one another across departments, locations, and with their families sharing what they have learned. Our program has become an extension of the benefits we provide to our employees because it is packed with tools and resources to encourage and support their individual paths.

A benefits consultant from our offices said, “Our program has brought the VolkBell team together, fostering greater teamwork and camaraderie. Employees realize that VB has their best interests in mind and wants to make sure they are given opportunities to live a healthy lifestyle. The program is a piece that makes people want to work at VolkBell.”

Since its inception, our program has earned local and national awards, including having VolkBell being voted one of the best small employers to work for in 2015.

A few highlights of our adventures include: spirit days, bike rides, and runs. Our employees have helped in harvesting projects and spend considerable time volunteering across the community.

One of the greatest rewards is the testimonial from a 16-year VolkBell employee.

“…Our program has given me the tools and education to make reasonable lifestyle changes one small step at a time. It encourages me to constantly look for ways to improve my health, both physically and mentally, and that is exactly what I’ve done…”

The Impact

Over the past four years, VolkBell has collected data that has shown the value of investment that Stayin’ Alive has provided to employees.

The number of minutes employees are exercising have gone up from 81.52 minutes a week (2.6 days a week) in year one, to 101.22 minutes a week (3.5 days a week) in year four.

Depression, on average, has also gone down in the last four years. In year one, employees stated feeling depressed two times in the past three months to feeling depressed 1.5 times in the past three months in year four.

Productivity has gone up from 2.92/10 in year one to 6.6/10 in year four. There have also been fewer days absent from work as the program has progressed. Productivity and absenteeism are important to note because even though they are nearly impossible to track, the fact that employees are reporting such significant increases in productivity and reductions in absenteeism is notable.

Client Retention and Growth Impacts

Following the implementation of our own program and having our own internal experiences, we were able to build more education, tracking programs, measurable data, and were able to provide an opportunity to create real behavior changes with clients.

We wanted to help employers tackle the same common problems we were facing and help them avoid the pitfalls in program design and execution. There was a need to align these wellness programs with benefit plans and become more of a consultant and less of a coordinator.

Our consulting approach is not to just “hand a client over.” We stay with them every step of the way.

Wellness is not always at the “top” of a client’s or prospect’s list of priorities when it comes to benefits, and they may not always utilize this service, but offering wellness consulting gives an advantage to a consultant when “closing the deal.”

There is an advantage in retention as our clients and prospects are aware we have a program and value the importance enough to ”walk the talk” with our own program. Clients want to know what we have done, who we have worked with, what has been successful, and what has not. It is the best reference for our clients.

Wellness aids us in driving outcomes and assisting clients and their employees and families achieve their own personal health goals and creating changes that can be of value to the overall health care system.

When I asked one of our partners what he has learned along the way since the inception of the program he said, “I have learned that wellness programs bring benefits that I did not anticipate, namely teamwork, healthy competition, and employees feeling that their employer really cares about them.”

The Secrets Behind a Successful Program

If asked what we saw as some of our “best kept secrets behind the success of our program,” there would be four:

Having a passionate staff and a committee trained and skilled in health and wellness is definitely a differentiator.

Clients that can see beyond an ROI and recognize that there is a greater VOI (value of their investment) are seeing greater success.

Successful programs have strong partnerships and alliances with wellness vendors, community resources and national associations to further support our services. Whether you are a broker, HR professional or CEO, I encourage you to develop strong partnerships as they are integral to your program’s success.

Most important, the coordinators of these successful programs understand that at the end of the day it’s about making someone’s life better!

Client Program Snapshot

As we move into our ninth year of wellness programming, I wanted to provide a snapshot of where some of our client’s programs are today. These are great examples of programs done right.

Today, our client’s programs are customized around the client, their culture, and the vendors we partner with to meet their unique design and needs while also upholding our service level standards. In fact, when possible, we feel strongly that having a wellness vendor is “key” to a truly successful program looking to create change.

Each program has a designated wellness budget, a committee, and a primary wellness representative that we work with ongoing. Most all of our programs are points based, so the employees earn points for completing activities.

Other clients not shown above focus on educational, non-incentive type programs for their employees.

Client Testimonials

Clients with a culture of wellness bring many benefits that are not necessarily calculated through claims costs, health care expenditure, etc. They are recognized through the statements directly from the employees.

“In short, I came for the savings, I stayed for my health. The first year, I only participated for cost savings thinking, ’who would really like this?’ The following year, I signed up for a health coach. Now I’m living healthier, eating better, exercising more, and more importantly, feeling better. Now I think ‘who wouldn’t really like this?’”

To understand legal requirements for wellness programs, request UBA’s ACA Advisor, “Understanding Wellness Programs and Their Legal Requirements,” which reviews the five most critical questions that wellness program sponsors should ask and work through to determine the obligations of their wellness program under the ACA, HIPAA, ADA, GINA, and ERISA, as well as considerations for wellness programs that involve tobacco use in any way.

Under the Affordable Care Act (ACA), members belonging to a certain number of organizations known as Health Care Sharing Ministries – sometimes called Christian Health Plans or Christian Ministries Plan – were granted an exemption from the personal tax penalty (up to 2.5% of one’s household income in 2016 and beyond) for not having a qualified plan under the Act. The basic concept behind these plans is to have those who meet certain membership qualifications (attend church regularly, do not smoke or drink, declare their belief in the Trinity, etc.), co-op and share in the costs of the other participants’ medical expenses. Sometimes this is accomplished by a level monthly contribution to the sponsoring organization, other times participants are asked to write a check directly to another member to cover their medical expenses.

While originally targeting individuals, these plans have gained some momentum as a substitute to an employer -sponsored, group medical plan. This paper primarily focuses on the dangers and potential legal pitfalls an employer should consider before using a Christian Ministries Plan as a replacement for their group health insurance.

The legal term in Latin, caveat emptor, or Let the buyer beware, applies here. In order to qualify for membership you must be screened for medical conditions and can be rejected if you are in poor health. Oftentimes pre-existing conditions are not covered until a person has been on the plan for twelve months. Both of these are prohibited practices for employer-sponsored, fully insured, and self-funded, medical plans. Thus employers may be subjecting themselves to potential legal liability and participants may inadvertently be assuming personal financial risk when using these programs.

It is a well-known insurance underwriting fact that when a program does not cover pre-existing conditions, the plan will run very profitably as long as there is a constant flow of new members whose claims can be denied because of conditions that existed before joining the plan. Profitability also occurs through the use of medical questions where only the healthiest people are accepted into the plan. If new membership declines and the “pool of members” becomes stagnant, claims and costs can begin to soar as these two “underwriting effects” wear off. As costs rise, the healthiest participants, being rational consumers, have every incentive to drop the coverage altogether or find other, less expensive alternatives. Decades of experience have proven that a pattern of healthy people abandoning a plan, leaving those with medical conditions to face rapidly increasing contributions, creates an almost irreparable death spiral. At that conjuncture, new, healthy participants who have no coverage for pre-existing conditions must be added at an aggressive rate in order to stave off an unavoidable plan insolvency. This can be problematic as many would contend that there are a finite number of people either eligible or interested in a Christian Health Plan, including healthy participants who: are willing to subject themselves to pre-existing conditions; are willing to attest or adhere to the required Christian values; are aware these plans even exist; or, do not consider it a viable option because they are receiving a subsidy under their employers plan or the Affordable Care Act. Thus it is plausible that it only is a matter of time before the pool of applicants is exhausted and a death spiral occurs.

While Martin Luther posted 95 theses, here is a list of 10 reasons why our agency and its licensed and credentialed professionals cannot represent this product in any manner:

Because the Health Care Sharing Ministries offering is not a fully insured product, there is no protection or oversite from the states’ Insurance Departments. Complaints to the Insurance Department in your state will not be addressed because they have absolutely no jurisdiction over these organizations;

Because this is not an insured product, it is not covered under any state-guaranteed funds, which promise to pay policyholders in the case of bankruptcy or insolvency of an insurance company. In Utah, this is the Utah Life and Health Insurance Guaranty Association;

The normal fallback federal regulatory agency for health insurance complaints is the Department of Labor. They regularly deal with complaints on self-funded plans. They have no oversight or regulatory authority over Heath Care Sharing Ministries offerings. Complaints lodged here will go unheard and unresolved;

Employers who replace their group health plan with a Health Care Sharing Ministries offering may be at risk for a lawsuit from their employees should the payments fall short of their expectation/promise, has unreimbursed claims or the organization files for bankruptcy;

Because the Health Care Sharing Ministries offering is not insurance, they are not covered by an agent’s Errors and Omissions policy for lack of performance, leaving the consumer and an agency exposed to undue liability exposure;

A recent IRS ruling regarding Health Care Sharing Ministries plans (https://www.irs.gov/pub/irs-wd/16-0051.pdf) regarding employer contributions to these plans, states: “the law does not exclude employer payment for the cost of employee participation from the employee’s gross income. Instead, the law considers it as taxable income and wages to the employee.” This clarification reminds us that an employee must pay Federal, State, Local and Social Security Taxes and an employer must pay the matching Social Security and Unemployment taxes. This could add a 30–50%+ cost differential to the Christian Ministry Plan. Additionally, because many Christians tithe at 10% of their wages, this additional income could take a bigger bite out of the employee’s purchasing power;

Because these plans reimburse claims at Medicaid,plus a certain percentage, more and more hosptials and physicians are refusing to accept these reimbursements as “payment in full.” Before being admitted to most any facility, a patient typically signs a mountain of paperwork including an agreement to be personally liable for any expenses not covered by their insurance. The Christian Ministry Plan is not health insurance and there is no provider network with pre-negotiated discounts. We are seeing a greater number of medical providers collecting the difference.

If an employer dismantles their group health plan and substitutes a Christian Ministries Plan, there is a potential that it may be determined that the Christian Ministries Plan is a group plan. Case law has shown that individual plans which are sponsored by and paid for directly or indirectly by an employer (i.e., via direct contributions or through a pay raise) are considered group plans. Employer-sponsored plans need to provide coverage under laws that are required of group plans. For example, the Pregnancy Act of 1978 (which amended the Civil Rights Act of 1964) requires that all employers with 15 or more total employees (full or part-time) treat pregnancy the same as any other medical condition. If an employee or their eligible spouse is denied coverage because they are currently pregnant (pre-existing condition) or limitations are placed on the plan coverage (hospital day limits, dollar amount limits or claim denial) because of their pregnancy, they may run afoul of the Pregnancy Act and risk a civil rights investigation/lawsuit.

A large employer (50 or more Full-Time Equivalent Employees) could not report a Christian Ministries Plan as an offer of health coverage so they would be subject to the “play or pay” penalty ($3,000.00 per employee per year) because this offering is not considered insurance or minimal essential coverage under the Affordable Care Act;

Finally, any employer could also risk a civil lawsuit or investigation from the Department of Labor/Office of Civil Rights under the auspices of discrimination for employees failing to qualify for coverage. Furthermore, employees who fail to qualify for the plan for tobacco and alcohol use, which is considered a health factor, could bring scrutiny and prosecution from the Department of Health and Human Services because discrimination based on a health factor is also prohibited.

The bottom line is that these programs are not insurance and rely totally on the trust and goodwill of the other members in the co-op. Should there be an economic downturn or any number of other reasons where a substantial number of members leave the plan, there is tremendous potential that claims may be unpaid as promised. Furthermore, without regulatory oversite for these offerings, no liability protection for an agent or agency and the potential of a federal discrimination investigation/lawsuit for employers who offer a Health Care Sharing Ministries plan as a substitute for a group health plan, we cannot in good conscience recommend or place these offerings for our valued clients or prospects.

Most Partners of United Benefit Advisors (UBA) and their clients have benefits enrollment down pat. They know what to communicate to employees, and when. Employees, too, are usually familiar with the process. For example, they know what to expect when they start comparing their medical plan options to their 401(k) contributions. But not all benefits are created equally. Some require more communication, understanding, and detail. Long term care insurance (LTCi) is one of those products. More than any other benefit, it calls for well-thought-out employee education.

LTCi education is critical to employees for the following reasons:

Underwriting concessions are available for a limited time only and an employee’s health determines approval. Employers are able to offer long term care insurance with reduced underwriting, but the employees can only take advantage of this offer during initial enrollment. It will not be available at any other time – including during future open-enrollment periods – so it’s essential that employees understand the advantages of this benefit at a time when they will receive their best opportunity for approval.

LTCi isn’t just another voluntary benefit, it’s an important component of any employee’s retirement plan. Long-term care can be a huge financial burden for many Americans. Those who buy long term care insurance are doing so to protect their savings and assets down the road. As a result, LTCi becomes a critical aspect of an overall retirement plan. Employees will want guidance on which coverage options best suit their financial needs.

LTCi is often a one-time purchase and employees may face closed plans and rate increases. Unlike other benefits where providers may change from year-to-year, the majority of LTCi purchasers will hold on to their original plan for life. As the market evolves and carriers develop new products, an employer may be administering multiple LTCi programs to employees. Employees will be curious how their plan stacks up – especially if they have a plan with MetLife, John Hancock, Prudential, or CNA since those carriers no longer offer new LTCi plans. Employees may also be impacted by rate increases with these carriers and will need education-based support on what decisions to make regarding their increased premium. Helping employees compare programs will allow them to make an informed decision about their plan.

What Employees Need to Know

Employees need focused time, separate from other benefits education, to learn about LTCi. It is important to communicate with them, both in writings and through in-person or Web meetings, so that they can learn:

What long-term care is, how likely it is they will need it, how it’s delivered, and the costs associated with it

What LTCi covers and how it differs from other benefits

The risks associated with not having LTCi

Myths about long-term care coverage (for example, that it’s only needed by the elderly or that it only covers nursing home care)

An overview of options and an understanding of all possible solutions for long-term care

Tax incentives available for LTCi

The right time to buy LTCi and the risks associated with waiting

Decision-making tools to help select the best coverage levels for their needs

We’ve had a great reception from UBA Partners and clients who are interested in LTCi for their employees. One of the primary themes we continue to hear is that LTCi is on the to-do list for many brokers and employers. When employees have all of this information laid out in an accessible, easy-to-understand way, they will be able to make informed decisions about this valuable benefit.

Historically, employers have utilized health risk assessments (HRAs) as one measurement tool in wellness programs design. The main goals of an HRA are to assess individual health status and risk and provide feedback to participants on how to manage risk. Employers have traditionally relied on this type of assessment to evaluate the overall health risk of their population in order to develop appropriate wellness strategies.

Recently, there has been a shift away from the use of HRAs. According to the 2016 UBA Health Plan Survey, there has been a 4 percent decline in the percentage of employer wellness programs using HRAs. In contrast, the percentage of wellness programs offering biometric screens or physical exams remains unchanged – 68 percent of plans where employers provide wellness offer a physical exam or biometric screening.

One explanation for this shift away from HRAs is an increased focus on helping employees improve or maintain their health status through outcome-based wellness programs, which often require quantifiable and objective data. The main issue with an HRA is that it relies on self-reported data, which may not give an accurate picture of individual or population health due to the fact that people tend to be more optimistic or biased when thinking about their own health risk. A biometric screening or physical exam, on the other hand, allows for the collection of real-time, objective data at both the individual and population level.

Including a biometric screening or physical exam as part of a comprehensive wellness program can be beneficial for both the employer and employees. Through a biometric screening or physical exam, key health indicators related to chronic disease can be measured and tracked over time, including blood pressure, cholesterol levels, blood sugar, hemoglobin, or body mass index (BMI). For employees, this type of data can provide real insight into current or potential health risks and provide motivation to engage in programs or resources available through the wellness program. Beyond that, aggregate data collected from these types of screenings can help employers make informed decisions about the type of wellness programs that will provide the greatest value to their company, both from a population health and financial perspective.

One success story of including a physical exam as part of a wellness program comes from one of our small manufacturing clients. From the initial population health report, the company learned that there was a large percentage of its population with little to no health data, resulting in the inability to assign a risk score to those individuals. It is important to note that when a population is not utilizing health care, it can result in late-stage diagnoses, resulting in greater costs and a burden for both the employee and employer. In addition, there was low physical compliance and a high percentage of adults with no primary care provider. In order to capture more information on its population and better understand the current health risks, the company shifted its wellness plan to include annual physicals as a method for collecting biometric data for the 2016 benefit year. Employees and spouses covered on the plan were required to complete an annual physical and submit biometric data in order to earn additional incentive dollars.

By including annual physicals in its wellness program, positive results were seen for employees and spouses and the company was able to make an informed decision about next steps for its wellness program. After the first physical collection period, the percentage of individuals with little to no information was reduced from 31 percent to 16 percent (Figure A). Annual physical compliance increased from 36 percent in 2015 to over 80 percent in 2016 (Figure B), which means more individuals were seeing a primary care provider. As a result of increased biometric data collection and one year of Vital Incite reporting, the company was able to determine next steps, which included addressing chronic condition management, specifically hypertension and diabetes, with health coaching or a disease management nurse.

Figure A – RUB Distribution 2014 –

Figure B – Preventive Screening Compliance

Employers that are still interested in collecting additional information from employees may consider including alternatives to the HRA, such as culture or satisfaction surveys. These tools can allow employers the opportunity to evaluate program engagement and further understand the needs and wants of their employee population.

To understand legal requirements for wellness programs, request UBA’s ACA Advisor, “Understanding Wellness Programs and Their Legal Requirements,” which reviews the five most critical questions that wellness program sponsors should ask and work through to determine the obligations of their wellness program under the ACA, HIPAA, ADA, GINA, and ERISA, as well as considerations for wellness programs that involve tobacco use in any way.

Under the Affordable Care Act (ACA), members belonging to a certain number of organizations known as Health Care Sharing Ministries – sometimes called Christian Health Plans or Christian Ministries Plan – were granted an exemption from the personal tax penalty (up to 2.5% of one’s household income in 2016 and beyond) for not having a qualified plan under the Act. The basic concept behind these plans is to have those who meet certain membership qualifications (attend church regularly, do not smoke or drink, declare their belief in the Trinity, etc.), co-op and share in the costs of the other participants medical expenses. Sometimes this is accomplished by a level monthly contribution to the sponsoring organization, other times participants are asked to write a check directly to another member to cover their medical expenses.

This paper primarily focuses on the dangers and potential pitfalls an individual should consider before using a Christian Ministries Plan as a replacement for their health insurance plan.

The legal term in Latin, caveat emptor, or Let the buyer beware, applies here. In order to qualify for membership you must be screened for medical conditions and can be rejected if you are in poor health. Often times pre-existing conditions are not covered until a person has been on the plan for twelve months. In a number of plans, prescription drugs are not a covered expense. Thus individuals may be inadvertently subjecting themselves to potentially staggering out-of-pocket expenses and assuming personal financial risk when using these programs.

It is a well-known insurance underwriting fact that when a program does not cover pre-existing conditions, the plan will run very profitably as long as there is a constant flow of new members whose claims can be denied because of conditions that existed before joining the plan. Profitability also occurs through the use of medical questions where only the healthiest people are accepted into the plan. If new membership declines and the “pool of members” becomes stagnant, claims and costs can begin to soar as these two “underwriting effects” wear off. As costs rise, the healthiest participants, being rational consumers, have every incentive to drop the coverage altogether or find other less expensive alternatives. Decades of experience have proven that a pattern of healthy people abandoning a plan, leaving those with medical conditions to face rapidly increasing contributions, creates an almost irreparable death spiral. At that conjuncture, new, healthy participants who have no coverage for pre-existing conditions must be added at an aggressive rate in order to stave off an unavoidable plan insolvency. This can be problematic as many would contend that there are a finite number of people either eligible or interested in a Christian Health Plan, including healthy participants who are: willing to subject themselves to pre-existing conditions; are willing to attest or adhere to the required Christian values; are aware these plans even exist; or, do not consider it a viable option because they are receiving a subsidy under their employers plan or the Affordable Care Act. Thus it is plausible that it only is a matter of time before the pool of applicants is exhausted and a death spiral occurs.

While Martin Luther posted 95 ninety theses, here is a list of seven reasons why our agency and its licensed and credentialed professionals cannot recommend this product to individuals in any manner:

Because the Health Care Sharing Ministries offering is not a fully insured product, there is no protection or oversite from the states’ Insurance Departments. Complaints to the Insurance Department in your state will not be addressed because they have absolutely no jurisdiction over these organizations;

Because this is not an insured product, it is not covered under any state-guaranteed funds, which promise to pay policyholders in the case of bankruptcy or insolvency of an insurance company. In Utah, this is the Utah Life and Health Insurance Guaranty Association;

The normal fallback federal regulatory agency for health insurance complaints is the Department of Labor. They regularly deal with complaints on self-funded plans. They have no oversight or regulatory authority over Heath Care Sharing Ministries offerings. Complaints lodged here will go unheard and unresolved;

Individuals who replace their personal or group health plan with a Health Care Sharing Ministries offering may be at risk for a number of uninsured expenses (pregnancy, pre-existing conditions, prescription drugs, etc.);

Because the Health Care Sharing Ministries offerings is not insurance, they are not covered by an agent’s Errors and Omissions policy for lack of performance, leaving the consumer and an agency exposed to undue liability exposure;

A recent IRS ruling regarding Health Care Shere Ministries plans (https://www.irs.gov/pub/irs-wd/16-0051.pdf) regarding employer contributions to these plans, states: “the law does not exclude employer payment for the cost of employee participation from the employee’s gross income. Instead, the law considers it as taxable income and wages to the employee.” This clarification reminds individuals that this is not a tax deductible expense on a person’s tax return and if an employer offers to reimburse part of the cost, an employee must pay Federal, State, Local and Social Security taxes. This could be a 30%–50+% cost differential to the Christian Ministry Plan over an employer-sponsored medical plan. Additionally, many Christians tithe at 10% of their wages, this additional income could take a bigger bite out of the employee’s purchasing power;

Because these plans reimburse claims at Medicaid, plus a certain percentage, more and more hosptials and physicians are refusing to accept these reimbursements as “payment in full.” Before being admitted to most any facility, a patient typically signs a mountain of paperwork including an agreement to be personally liable for any expenses not covered by their insurance. The Christian Ministry Plan is not health insurance and there is no provider network with pre-negotiated discounts. We are seeing a greater number of medical providers collecting the difference.

The bottom line is that these programs are not insurance and rely totally on the trust and goodwill of the other members in the co-op. Should there be an economic downturn or any number of other reasons where a substantial number of members leave the plan, there is tremendous potential that claims may be unpaid as promised. Furthermore, without any regulatory oversite for these offerings, no liability protection for an agent or agency, we cannot in good conscience recommend or place these offerings for our valued clients or prospects.

In a previous blog, we discussed the exorbitant cost of drugs, even generics and the tactics that the pharmacy industry employs to keep the costs high. Well, as the 1974 Bachman Turner Overdrive hit song goes, “You Ain’t Seen Nothing Yet!”

Over the past few months, having participated in over a half-dozen health insurance meetings, carrier broker advisory panels and most recently listening to the President of the nation’s largest Pharmacy Benefit Management company, there is unanimous agreement that by late 2019 or sometime during 2020, pharmacy spend in a health insurance plan will account for 50% of the healthcare pie. That is a dramatic increase compared to the current level at 14% to 17% for most plans.

That doesn’t mean that all other healthcare expenses will remain static. No, they will increase as they have historically, at two to three times the current rate of inflation.

Besides the tinkering and price gouging by the pharmaceutical industry described in the previous article, what keeps the health insurance industry thought leaders up at night? The proliferation of specialty drugs. Specialty drugs are a class of pharmaceuticals that treat a specific disease and are allowed to proceed on a fast track for FDA approval. They can be both and injectable or an oral medication. Because they treat a disease or symptom that doesn’t have a large number of diagnoses, they have a dramatically higher price tag versus standard medications. Here are a few examples of the annual retail cost of some specialty drugs:

Oncology: Eight approved by August 2016 sixteen in the pipeline through 2017. Cost estimates are $125,000 to $500,000 per course of treatment;

Muscular Dystrophy: Exondys 51® $300,000 (This drug’s approval was initially rejected by the FDA but extreme political pressure to approve this drug even though initial clinical trials didn’t show any significant improvement in MD patients. This pressure caused the FDA to reverse its decision and allow the drug’s use with an ongoing random control study.)

This isn’t even the tip of the iceberg. So far this year and over the next two years alone there are dozens of new specialty drugs in almost every area of medical practice receiving approval, many costing hundreds of thousands of dollars per year or course of treatment. Even more concerning is that many of these drugs have biologic formulations which are nearly impossible to duplicate even after a patent expires giving the drug company a virtual lifetime monopoly on the drug.

Increasing prescription costs are affecting all aspects of health insurance delivery, from private insurance companies, to Medicaid for the poor, to the VA for our veterans and Medicare for our senior population. Medicare Trustees recently reported that their trust funds will be completely depleted two years sooner than previously projected (in 2028 versus 2030) with pharmaceutical costs being the primary driver. The costs are being shouldered almost entirely by working tax payers.

Where does this leave us as consumers of health care? Specialty drugs are targeting roughly 2% of the population yet are projected to account for 50% of the overall costs. A few of the questions we must grapple as a society are:

“At what point does health insurance become so unaffordable or deductibles are so high that people forego medically necessary treatments because they simply cannot bear the cost of insurance or their portion of the overall costs?”

“Most of us are fine with limiting expensive treatments for everyone else. What if one of those treatments would extend the life or quality of life for our spouse or child?”

“If an employer is faced with the prospect of dropping medical insurance for all of its employees versus eliminating specific drugs or procedures that none of its employees may rarely use in order to make the coverage affordable, does that make them a poor employer to work for or socially irresponsible?”

These are some tough questions we will need to deal with as a society.

While there are no clear or immediate solutions don’t expect congress to act on anything dramatic. There are currently 1,266 registered lobbyists in Washington, D.C. representing the pharmaceutical industry. With 100 U.S. Senators and 435 U.S. Representatives, one of these lobbyists could take a congressman to lunch every day of the year and a Representative or Senator would never see the same lobbyist twice in over years. The only thing that seems to get a congressman’s attention is a ground swell of complaints because getting re-elected is paramount to their legislative career.

A solution to the exponential health care costs needs to be devised soon. Other than eliminating expensive drugs and procedures from medical plans there doesn’t seem to be any solutions on the horizon. Perhaps it’s time for all of us to decide what we can afford as a society and raise the voice of concern to all who will listen.

This blog was written by Scott Deru, RHU, REBC, President of Fringe Benefit Analysts, LLC®, an employee benefit consulting firm providing benefit solutions for firms throughout the country. Scott is a Registered Health Underwriter and Registered Employee Benefit Consultant and is currently Vice Chairman of the Board of United Benefit Advisors, an international partnership of premier benefit advisors.

The Consolidated Omnibus Budget Reconciliation Act (COBRA) is a federal requirement of group health plans to provide COBRA continuation coverage to participants who lose coverage due to a qualifying event, when the employer had 20 or more full time employees. Over the years, many states enacted additional requirements similar to COBRA, either for small employers, or in addition to the federal COBRA requirements. UBA has created a chart to outline each state’s specific continuation laws. For a sampling of the types of laws employers need to be aware of, consider these seven states (and view our full Compliance Advisor with the detail on all 50 states)

Over the past few years, we have seen the cost of health care steadily increase – a trend supported by the latest data from the 2016 UBA Health Plan Survey. During the recession, employers implemented health plans with higher copays, higher deductibles, or offered multiple plans with a variety of deductibles and pushed the cost of the lower deductible plans onto employees in an attempt to keep their costs for offering coverage at the same rate or less.more

We also saw the introduction of high deductible consumer-driven health plans (CDHPs), some that also offered the option of depositing money on a tax-free basis into a health savings account (HSA) that could be used to pay for qualified medical expenses.

The HSA plans were very attractive, as many offered 0% coinsurance once the $2,000 or $3,000 deductible had been met and were priced well below other more traditional health plans. The expectation being if the consumer was paying all of their medical costs for the first few thousand dollars, they would be less likely to actively consume health care unless necessary.

It was also a way for employers to reduce premium costs by offering a high deductible plan, and fund an HSA account that an employee could use to pay for qualified medical expenses and essentially self-fund most of the up-front costs to the employee for the medical plan. In many cases, employers were able to offer a richer medical plan by combining the medical plan with HSA contributions, and still save money over their current traditional health plan costs.

What the insurance carrier actuaries did not realize was the impact this funding of the health plan consumer costs was going to have on the utilization of the health plans by the plan members. These low premium health plans were essentially “blown up” with heavy utilization, and the premiums went up so that the carriers could cover the cost of the claims and services being provided.

The insurance carriers are trying to do everything they can to keep premium costs from rising while still keeping the plan benefits within the confines of what the Patient Protection and Affordable Care Act (ACA) says must be covered. It is a balancing act, and one that is not moving in favor of the employees and their dependents.

Furthermore, the 2016 UBA Health Plan Survey has also shown a reduction in employer funding toward HSAs for employees this past year, and employers are asking employees to take on more and more of the insurance premiums, which again translates into higher costs for employees.

A friend recently recounted to me his recent visit to the pharmacy needing to fill his Crestor® prescription to control his cholesterol. Excited by the prospect of saving some money because Crestor® had recently gone generic and the cost should have dropped dramatically, he was shocked to find out that a 90-day supply was $711 for the generic version, just $39 less expensive than the name brand. Shopping more than a dozen pharmacies yielded similar results. Because he was on a high deductible health plan and the money was coming from his Health Savings Account, this was a big bite from his long-term medical savings.

When a drug’s patent has expired and a new manufacturer begins producing a generic equivalent, initially the prices do not decrease dramatically – commonly taking six months to a year to see major price reductions. When questioned about their high prices, pharmacy company executives often state that their pricing model is based on “what the market will bear.” The market seems to bear most of these price increases because consumers frequently pay only a portion of the cost because a third party payer (an insurance company of Medicare/Medicaid) is covering a substantial portion of the cost. With high deductible health plans more widely being selected, consumers are increasingly feeling the sting of these exorbitant charges directly.

Just how widespread is the problem of increasing drug costs? The Journal of American MedicalAssociation published a study with a sobering statistic: Per capita, drug spending in the United States is a staggering $858 per year compared to $400 spent by the citizens in 19 other industrialized nations. In the U.S. prescription drugs now make up 17% of our total personal medical spending.

The national media has been reporting some high profile cases of price gouging. Most recently, Mylan, the manufacturer of the EpiPen®, has been in the news for increasing the cost of this lifesaving drug to treat severe allergic reactions such as food allergies and bee stings from over 400% to $800 for a two dose pack. The outrage is that this medication costs around $1 and the dispensing device $5-$6. Before that, Turing Pharmaceuticals, the maker of Daraprim®, the life-saving drug that has been around for decades to treat malaria and more recently to prevent infection in HIV patients, increased their prices 5,000% to $750 a pill. The new CEO (hedge fund manager and new company owner) smugly sat before a congressional hearing and repeatedly invoked his 5th Amendment self-incrimination rights to outraged congressional committee members.

These two headline examples are just the tip of the iceberg. The average price of insulin for diabetics has increased over 300% from 2002 to 2013. The blood pressure medication Digoxin® has jumped 637% and the heart drug Isoproterenol® skyrocketed 2,500% – these are not innovative drugs new to the market but have been around for decades. All told, there are 400 generic drugs that have risen over 100% between 2008 and 2015.

One of the arguments the drug manufacturers use to justify their high prices is that a vast majority of the research and development for the drugs throughout the world is performed by the U.S. drug companies and this R&D is very expensive because of all the clinical trials and government regulations and approvals that need to take place prior to approval and taking a drug to market. It is true that pharmaceutical companies spend between 10-15% of their total revenue on R&D, but there is more to the story. The fact is that these same companies spend more on direct to consumer advertising than they do on research and development. Why you ask? Because it works – it drives massive purchases by consumers. A patient who presents a manufacturer’s-provided coupon to their physician will receive that prescription 80% of the time. The bottom line is that it is very profitable for big Pharma to advertise. And the drugs they are advertising, many aren’t any more effective than those currently on the market, they don’t have to be to receive a patent or FDA approval, they just have to work as described.

This isn’t big Pharma’s only bag of tricks. One manufacturer pulled their drug a few months before it went generic so that patients would have to switch to the newly formulated equivalent with the hope that patients wouldn’t switch to the generic once it was available. Other drug manufacturers have outright purchased the manufacturer approved to produce the drug generically or paid them to delay the manufacturing of the generic drug thus maintaining their ability to control artificially high prices. These are just a few of the creative methods drug manufacturers have deployed to keep the cost of prescription drugs exorbitantly high.

How are the pharmaceutical companies doing? Extremely well. Profits are at an all-time high as are the number of new drugs in the approval pipeline.

By the way, did you ever wonder what happened to my friend and his expensive generic Crestor® prescription? Using Fringe Benefit Analysts’ pharmacy transparency and discount tool he paid $62.58, a savings of nearly $650 for a 90-day supply.

Watch for the next blog, with the theme from the Bachman-Turner Overdrive hit: You Ain’t Seen Nothing Yet!” part two of this discussion on increasing drug costs. There is something happening in the pharmacy industry that will drive medical costs up exponentially.

This blog was written by Scott Deru, RHU, REBC, President of Fringe Benefit Analysts, LLC®, an employee benefit consulting firm providing benefit solutions for firms throughout the country. Scott is a Registered Health Underwriter and Registered Employee Benefit Consultant and is currently Vice Chairman of the Board of United Benefit Advisors, an international partnership of premier benefit advisors.

The transitional reinsurance fee (TRF) applies to fully insured and self-funded major medical plans for 2014, 2015, and 2016. The purpose of the fee is to provide funds to help stabilize premiums in the individual insurance market in view of uncertainty about how the Patient Protection and Affordable Care Act (ACA) would affect claims experience. While insurers are responsible for reporting and paying the fee on the policies they issue, the fee will generally be passed on to the employer. Plan sponsors of self-funded plans (or their representatives) must report and pay the fee to the federal government at www.pay.gov. Below are the answers to the top five most common questions about the TRF.more

Q1: What plans does the TRF apply to?

A1: All plans that provide primary major medical coverage to employees or retirees owe this fee. Major medical coverage includes medical plans that provide minimum value (that is, have an actuarial value of 60 percent or more) and all medical policies provided through the Marketplace. If the employer uses multiple separate plans or policies that collectively provide major medical coverage, one fee is due on that combined coverage.

The fee does not apply to:

Medical coverage if the employer or retiree plan is secondary

Medical coverage that does not provide minimum value, such as a “skinny” plan

Stand-alone dental and vision plans (stand-alone means these benefits are elected separately from medical, or the benefits are provided under separate insurance policies from the medical coverage)

Life insurance

Short- and long-term disability and accident insurance

Long-term care

Health flexible spending accounts (FSAs)

Health savings accounts (HSAs)

Health reimbursement arrangements (HRAs)

Hospital indemnity or specified illness coverage

Employee assistance programs (EAPs) and wellness programs that do not provide major medical coverage

Stop-loss coverage

Q2: Does the fee apply to all types of plan sponsors?

A2: There are no exceptions for small employers. There are no exceptions for government, church or not-for-profit plans. Grandfathered plans owe this fee. Union plans must pay the fee on their covered members. However, self-funded plans that are self-administered (that is, they do not use a third party vendor to process claims or eligibility) are exempt from the filing and fee for 2015 and 2016.

Q3: Who must pay this fee?

A3: The fee must be determined and paid by:

The insurer for fully insured plans.

The plan sponsor of self-funded plans (this is typically the employer for a single-employer plan and the board or committee for a multiemployer plan). The plan’s third-party administrator (TPA) may assist with the calculation and pay the applicable fee on behalf of the plan sponsor.

Q4: When is the TRF filing due?

A4: The TRF filing is due by December 5, 2014, November 16, 2015, and November 15, 2016. (The due date is the same for both calendar year and non-calendar year plans.) Originally, the 2014 filing was due on November 15, 2014, but that deadline was extended.

Q5: When is the fee due?

A5: Employers and insurers may pay the fee in one installment, by January 15, 2015, January 15, 2016, and January 17, 2017, or in two installments each year. If paid in installments, the larger installment will be due January 15, and the smaller installment will be due the following November 15. For example, if the 2014 fee is paid in installments, $52.50 per person will be due January 15, 2015, and $10.50 per person will be due November 15, 2015.

For the 2014 benefit year, the second payment was due no later than November 15, 2015.

For the 2015 benefit year, it can be paid in one payment, due by January 15, 2016, or in two payments, the first by January 15, 2016, and the second by November 15, 2016. Although the fees are due in January 2016 and November 2016, information and payment scheduling is due by November 16, 2015.

For the 2016 benefit year, it can be paid in one payment, due by January 17, 2017, or in two payments, the first by January 17, 2017, and the second by November 15, 2017. Although the fees are due in January 2016 and November 2016, information and payment scheduling is due by November 15, 2016.

Health Insurance Policies and the Coming Changes

Following the November 2016 election, Donald Trump (R) will be sworn in as the next President of the United States on January 20, 2017. The Republicans will also have the majority in the Senate (51 Republican, 47 Democrat) and in the House of Representatives (238 Republicans, 191 Democrat). As a result, the political atmosphere is favorable for the Trump Administration to begin implementing its healthcare policy objectives. Representative Paul Ryan (R-Wis.) will likely remain the Speaker of the House. Known as an individual who is experienced in policy, it is expected that the Republican House will work to pass legislation that follows the health care policies in Speaker Ryan’s “A Better Way” proposals. The success of any of these proposals remains to be seen.

Employers should be aware of the main tenets of President-elect Trump’s proposals, as well as the policies outlined in Speaker Ryan’s white paper. These proposals are likely to have an impact on employer sponsored health and welfare benefits. Repeal of the Patient Protection and Affordable Care Act (ACA) and capping the employer-sponsored insurance (ESI) exclusion for individuals would have a significant effect on employer sponsored group health plans.

Allow individuals to use health savings accounts (HSAs) in a more robust way than regulation currently allows. President-elect Trump’s proposal specifically mentions allowing HSAs to be part of an individual’s estate and allowing HSA funds to be spent by any member of the account owner’s family.

Require price transparency from all healthcare providers.

Block-grant Medicaid to the states. This would remove federal provisions on how Medicaid dollars can and should be spent by the states.

Remove barriers to entry into the free market for the pharmaceutical industry. This includes allowing American consumers access to imported drugs.

President-elect Trump’s proposal also notes that his immigration reform proposals would assist in lowering healthcare costs, due to the current amount of spending on healthcare for illegal immigrants. His proposal also states that the mental health programs and institutions in the United States are in need of reform, and that by providing more jobs to Americans we will reduce the reliance of Medicaid and the Children’s Health Insurance Program (CHIP).

Speaker Ryan’s “A Better Way” Proposal

In June 2016, Speaker Ryan released a series of white papers on national issues under the banner “A Better Way.” With Republican control of the House and Senate, it would be plausible that elected officials will begin working to implement some, if not all, of the ideas proposed. The core tenants of Speaker Ryan’s proposal are:

Repeal the ACA in full.

Expand consumer choice through consumer-directed health care. Speaker Ryan’s proposal includes specific means for this expansion, namely by allowing spouses to make catch-up contributions to HSA accounts, allow qualified medical expenses incurred up to 60 days prior to the HSA-qualified coverage began to be reimbursed, set the maximum contribution of HSA accounts at the maximum combined and allowed annual high deductible health plan (HDHP) deductible and out-of-pocket expenses limits, and expand HSA access for groups such as those with TRICARE coverage. The proposal also recommends allowing individuals to use employer provided health reimbursement account (HRA) funds to purchase individual coverage.

Support portable coverage. Speaker Ryan supports access to financial support for an insurance plan chosen by an individual through an advanceable, refundable tax credit for individuals and families, available at the beginning of every month and adjusted for age. The credit would be available to those without job-based coverage, Medicare, or Medicaid. It would be large enough to purchase a pre-ACA insurance policy. If the individual selected a plan that cost less than the financial support, the difference would be deposited into an “HSA-like” account and used toward other health care expenses.

Cap the employer-sponsored insurance (ESI) exclusion for individuals. Speaker Ryan’s proposal argues that the ESI exclusion raises premiums for employer-based coverage by 10 to 15 percent and holds down wages as workers substitute tax-free benefits for taxable income. Employee contributions to HSAs would not count toward the cost of coverage on the ESI cap.

Allow health insurance to be purchased across state lines.

Allow small businesses to band together an offer “association health plans” or AHPs. This would allow alumni organizations, trade associations, and other groups to pool together and improve bargaining power.

Preserve employer wellness programs. Speaker Ryan’s proposal would limit the Equal Employment Opportunity Commission (EEOC) oversight over wellness programs by finding that voluntary wellness programs do not violate the Americans with Disabilities Act of 1990 (ADA) and the collection of information would not violate the Genetic Information Nondiscrimination Act of 2008 (GINA).

Ensure self-insured employer sponsored group health coverage has robust access to stop-loss coverage by ensuring stop-loss coverage is not classified as group health insurance. This provision would also remove the ACA’s Cadillac tax.

Address competition in insurance markets by charging the Government Accountability Office (GAO) to study the advantages and disadvantages of removing the limited McCarran-Ferguson antitrust exemption for health insurance carriers to increase competition and lower prices. The exemption allows insurers to pool historic loss information so they can project future losses and jointly develop policy.

Provide for patient protections by continuing pre-existing condition protections, allow dependents to stay on their parents’ plans until age 26, continue the prohibitions on rescissions of coverage, allow cost limitations on older Americans’ plans to be based on a five to one ratio (currently the ratio is three to one under the ACA), provide for state innovation grants, and dedicate funding to high risk pools.

Speaker Ryan’s white paper also addresses more robust protection of life by enforcing the Hyde Amendment (which prohibits federal taxpayer dollars from being used to pay for abortion or abortion coverage) and improved conscience protections for health care providers by enacting and expanding the Weldon Amendment.

Speaker Ryan also proposes other initiatives including robust Medicaid reforms, strengthening Medicare Advantage, repealing the Independent Payment Advisory Board (IPAB) that was once referred to as “death panels,” combine Medicare Part A and Part B, repealing the ban on physician-owned hospitals, and repealing the “Bay State Boondoggle.”

Process of Repeal

Generally speaking, the process of repealing a law is the same as creating a law. A repeal can be a simple repeal, or legislators can try to pass legislation to repeal and replace. Bills can begin in the House of Representatives, and if passed by the House, they are referred to the Senate. If it passes the Senate, it is sent to the President for signature or veto. Bills that begin in the Senate and pass the Senate are sent to the House of Representatives, which can pass (and if they wish, amend) the bill. If the Senate agrees with the bill as it is received from the House, or after conference with the House regarding amendments, they enroll the bill and it is sent to the White House for signature or veto.

Although Republicans hold the majority in the Senate, they do not have enough party votes to allow them to overcome a potential filibuster. A filibuster is when debate over a proposed piece of legislation is extended, allowing a delay or completely preventing the legislation from coming to a vote. Filibusters can continue until “three-fifths of the Senators duly chosen and sworn” close the debate by invoking cloture, or a parliamentary procedure that brings a debate to an end. Three-fifths of the Senate is 60 votes.

There is potential to dismantle the ACA by using a budget tool known as reconciliation, which cannot be filibustered. If Congress can draft a reconciliation bill that meets the complex requirements of our budget rules, it would only need a simple majority of the Senate (51 votes) to pass.

Neither President-elect Trump nor Speaker Ryan has given any indication as to whether a full repeal, or a repeal and replace, would be their preferred method of action.

The viability of any of these initiatives remains to be seen, but with a Republican President and a Republican-controlled House and Senate, if lawmakers are able to reach agreeable terms across the executive and legislative branches, some level of change is to be expected.

The news of Donald Trump becoming our nation’s 45th President came as a complete shock to many in this country, yours truly included. Now that the dust has settled and this reality has sunk in, there are many questions to be asked. These relate to foreign policy, immigration reform and at least one Supreme Court nominee. We, however, are healthcare consultants and the questions crossing our desks relate to Obamacare’s future and how we see changes in the market shaping up. No one knows of course and as we also know the President does not make laws. That is the job of Congress. The President does, however, promote policy that in many cases does lead to a bill or series of bills. Considering that president-elect Trump will have both a majority in the House and Senate, we must surmise that we will see the next round of proposed health care reform rather quickly; within the first 100 days of his Presidency if he keeps his promise.

So what exactly will the “replace” portion of Repeal and Replace look like? We, at Fringe Benefit Analysts, have read the tea leaves and this is what we see:

First off, the promise to completely repeal the Affordable Care Act will be next to impossible to accomplish. Even though the new president will have a majority in the Senate, it is not one that is filibuster-proof. Using some sort of reconciliation to get around that fact, as the Democrats were able to do, is also highly unlikely. This is because two bills were initially passed and reconciliation was used to combine them. The scenario in 2017 will be much different.

Also keep in mind that many Americans, even very conservative ones, like portions of the Affordable Care Act; even if they can’t admit it. You would be-hard pressed to find a large section of the country wanting a return to pre-existing condition limitations, no longer covering children to age 26, denying coverage to members of a family with health problems and taking away the 100% coverage level on preventive care services.

Rather, we see a proposal to replace the Affordable Care Act with a modified version of…the Affordable Care Act. This will be a package of bills that maintains the core benefits with a number of market reforms. They would essentially be as follows (in no particular order):

A modification of premium subsidies and the elimination of cost sharing subsidies altogether. In order to get the Democrats to play ball there will need to be some modicum of retaining these subsidies, albeit for much lower incomes than current, and a complete reformulation of the Modified Adjusted Gross Income calculation.

The ability to purchase health insurance across state lines. This has been a huge talking point for Republicans, but carries little weight. Many carriers limit their network contracting to a small geographic area so this does little for them and the states will fight to maintain their sovereignty in this area.

An effort to reign in healthcare costs. This will include limits on price markups from pharmaceutical companies as well as efforts to match the prices in the U.S to other developed nations. It will also mandate price transparency from hospitals and physicians. Good luck to the new President in fighting Pharma and the AMA on this.

Expansion of the tax credits for small businesses that offer health insurance to their employees and an ease in qualifying for these funds. Also expanding the tax deductibility of health insurance for those who purchase personal plans.

A complete overhaul of Qualified High Deductible Health Plans (HDHP) and the rules for Health Savings Accounts tied to them. The reforms would focus on providing more flexibility in the definition of what would qualify as an HDHP. For the HSA accounts we would see higher limits on funding as well as additional ways for these funds to be used.

Tighter restrictions on life events which allow individuals to purchase health insurance outside the open enrollment period. We would also see shorter windows on the enrollment period.

A repeal of a number of ACA-related taxes with an eye on the Cadillac Tax in particular.

Richer tax incentives and rewards for companies and participants in wellness-related activities and programs, with easier compliance for companies who want to participate in these.

A revision of the multi levels in benefits with flexibility in the actuarial requirements relating to plan design, as well as the ability to purchase plans at a coverage level that is below 60%.

A repeal of the individual and employer coverage mandates. The insurance industry and Democrats will fight hard to keep these.

Will any of these proposed reforms actually make it into law? Our opinion is yes, although we have tried to identify some that are longer shots than others. The bigger question is whether, if passed, any of these would actually bend the cost curve. The chances are actually favorable in that regard. The Affordable Care Act version of reform focused mainly on access and quality of coverage. The Trump version will focus more on freedom of choice and opportunities to reduce health care spending; which ultimately trickles down to health insurance premiums. That, however, is a slow process and likely too slow for the consumers who have faced much higher premiums of late. For that reason alone the 2018 mid-term elections could be a rough go for the Republican party. That is a solid reason for the new President to get to work on this agenda item…and quickly.

ACA FAQ

Though employers are not required to educate employees about their individual responsibilities under the Patient Protection and Affordable Care Act (ACA), it is helpful to know about the individual mandate.

The individual responsibility requirement (also known as the individual mandate) became effective for most people as of January 1, 2014. Under the individual mandate, most people residing in the U.S. are required to have minimum essential coverage or they must pay a penalty. Many individuals will be eligible for financial assistance through premium tax credits (also known as premium subsidies) to help them purchase coverage if they buy coverage through the health insurance Marketplace (also known as the Exchange).

For 2014, the penalty for an adult was the greater of $95 or 1 percent of household income above the tax filing threshold. For 2015, the penalty was the greater of $325 or 2 percent of income above the tax filing threshold. For 2016, the penalty is the greater of $695 or 2.5 percent of income above the tax filing threshold.

The penalty for a child under age 18 is 50 percent of the adult penalty. The maximum penalty per family is three times the individual penalty. The penalty is calculated and paid as part of the employee’s federal income tax filing.

A person must have “minimum essential coverage” to avoid a penalty. Minimum essential coverage is basic medical coverage and may be provided through an employer, Medicare, Medicaid, CHIP, TRICARE, some VA programs, or an individual policy (through or outside the Marketplace). Acceptable employer coverage includes both insured and self-funded PPO, HMO, HDHP and fee-for-service plans, as well as grandfathered coverage, COBRA, retiree medical, and health reimbursement arrangements (HRAs). It does not matter whether the coverage is provided directly by the employer or through another party, such as a multiemployer plan, a collectively bargained plan, a PEO, or a staffing agency.

While most people must obtain coverage or pay penalties, individuals will not be penalized if they do not obtain coverage and:

They do not have access to affordable coverage (cost exceeds 8 percent of modified adjusted gross household income)

They live outside the U.S. long enough to qualify for the foreign earned income exclusion

They reside in a U.S. territory for at least 183 days during the year

They are a member of a Native American Tribe

They belong to a religious group that objects to having insurance, including Medicare and Social Security, on religious grounds (for example, the Amish)

They belong to a health sharing ministry that has been in existence since 1999

They are incarcerated (unless awaiting trial or sentencing)

They are illegal aliens

If the person has access to employer-provided coverage as either the employee or an eligible dependent, affordability of the employer-provided coverage is the only factor considered for purposes of the individual mandate.

For the employee, coverage is unaffordable (so no penalty applies for failure to have coverage) if the cost of single coverage is more than 8 percent of household income.

For a dependent, coverage is unaffordable (so no penalty applies for failure to have coverage) if the cost of the least expensive employer-provided dependent coverage is more than 8 percent of household income.

If the employee and spouse both have access to coverage through their own employer, the cost for each person’s coverage is based on the cost of their own single coverage, but the totals are then combined to see if the total cost exceeds 8 percent of household income.

COBRA Facts and FMLA

In some of my previous blogs, the foundation of the Consolidated Omnibus Reconciliation Act of 1985 (COBRA) continuation coverage was reviewed. Now that the groundwork has been laid, it is time to tread into the territories (or laws) where employers can lose their footing. The area covered in the following is that of the intersection of COBRA facts and the Family and Medical Leave Act of 1993 (FMLA).

The FMLA affects COBRA continuation coverage requirements. The FMLA entitles eligible employees of covered employers to take unpaid, job-protected leave for specified family and medical reasons for up to 12 weeks. The FMLA also protects employees, spouses, and dependents who are covered under a group health plan (GHP); those covered are entitled to the continuation of coverage while on leave on the same terms as if the employee was continuing to work.

Confusion may arise when FMLA and COBRA cross paths. A few problematic areas include determining when a qualifying event occurs, when calculating the maximum coverage period, and the consequences of an employee’s failure to pay their share of premiums during FMLA leave.

Qualifying Event

Typically, FMLA and COBRA intersect if an eligible employee does not return to work after exhausting his or her FMLA leave. While FMLA is not a COBRA qualifying event, a qualifying event could occur if the employee does not return to work or notifies the employer of his or her intent to not return to work at the end of the FMLA period. A qualifying event occurs if: (1) an employee or the spouse or a dependent child of the employee is covered under a GHP of the employee’s employer on the day before the first day of FMLA leave (or becomes covered during the FMLA leave); (2) the employee does not return to work at the end of the FMLA leave; and (3) the employee or the spouse or a dependent child of the employee would, in the absence of COBRA continuation coverage, lose coverage under the GHP before the end of the maximum coverage period. When it comes to the qualifying event of reduction in hours, the IRS specifically excludes FMLA leave from that category.

If the employer eliminates coverage under the GHP for the employee’s class of employees during the employee’s FMLA leave, then there is not a qualifying event. Any lapse of coverage under a GHP during FMLA leave is irrelevant in determining whether a set of circumstances constitutes a qualifying event or when a qualifying event occurs. Assuming the employer does not eliminate the GHP, the qualifying event occurs after the FMLA leave is exhausted and the employee does not return to work (or notifies the employer of the intent to not return to work).

Maximum Coverage Period

A qualifying event occurs on the last day of FMLA leave. The maximum coverage period is measured from the date of the qualifying event. If, however, coverage under the GHP is lost at a later date and the plan provides for the extension of the required periods, then the maximum coverage period is measured from the date when coverage is lost. For example, if the last day of FMLA leave is on the 21st of the month but the plan does not terminate coverage until the last day of the month, the last day of the month is the day of the qualifying event. The maximum coverage period is calculated from the last day of the month.

If state or local law requires coverage under a group health plan to be maintained during a leave of absence for a period longer than that required under FMLA (for example, 16 weeks of leave rather than for the 12 weeks required under FMLA), the longer period of time is disregarded for purposes of determining when a qualifying event occurs.

(Not) Paying Premiums

While on FMLA leave, the employee must continue to make any normal contributions to the cost of the premiums. Employers have a few options for handling payment of premiums during unpaid leave; the adopted policy should be documented in the employee handbook and discussed prior to the employee taking FMLA leave, if possible.

An employer’s trap arises if an employee does not pay his or her portion of the premium while out on unpaid FMLA leave. The employer may be tempted to discontinue coverage upon failure of the employee to pay their share. However, this is problematic if the employer cannot guarantee that the employee will be provided the same benefits on the same terms upon returning to work.

The employee’s failure to pay their share of the premiums while on FMLA leave does not create a COBRA qualifying event. Additionally, employers may not condition COBRA continuation coverage on whether the employee reimburses the employer for the premiums the employer paid while the employee was on FMLA leave. Moreover, it is not acceptable for an employer to increase the COBRA premium rate above 102 percent in order to recoup “past premiums due” when the employee was out on FMLA leave.

What happens if an employee experiences a COBRA qualifying event and elects COBRA, after which the employee takes FMLA leave, during which the employee fails to pay the COBRA premiums? Recall that the FMLA requires an employer to reinstate the employee to the same group health benefits after returning from FMLA leave. COBRA, however, is not a group health plan under FMLA. Consequently, an employee’s failure to pay COBRA premiums while on FMLA leave does allow the plan to terminate the employee’s coverage. (Remember, there may be grace periods for late payment or more generous state laws impacting the decision and time to terminate coverage. Be sure those timelines are followed and documented.)

While there is potential for the weary employer to misstep, the intersection of FMLA and COBRA can be handled, so long as it is with care and caution.

For an in-depth look at qualifying events that trigger COBRA, the ACA impact on COBRA, measurement and look-back issues, health FSA carryovers, and reporting on the coverage offered, request UBA’s ACA Advisor, “COBRA and the Affordable Care Act”.

Fringe Benefit Services, Pay and Compliance

Employers that are subject to the McNamara-O’Hara Service Contract Act (SCA), Davis-Bacon Act (DBA), and Davis-Bacon Related Acts (Related Acts), and who are considered an applicable large employer (ALE) under the Patient Protection and Affordable Care Act (ACA) must ensure that they meet the requirements of all three acts, despite the fact that the interplay between them can be confusing and misunderstood. The Department of Labor has provided guidance for these employers based on two U.S. Department of Labor (DOL) documents: its December 28, 2015, Notice 2015-87 (DOL Notice) and its March 30, 2016, All Agency Memorandum Number 220 (DOL Memo).

The DOL Notice and DOL Memo give guidance on the interaction between the SCA’s and DBA’s fringe benefit service requirements and the ACA’s employer shared responsibility provisions.

What are the SCA’s general wage and fringe benefit services requirements?

The SCA generally requires that workers employed on federal service contracts greater than $2,500 be paid prevailing wages and fringe benefits. For some SCA contracts, the required wages and fringe benefits are provided in the predecessor contract’s collective bargaining agreement. However, for most SCA contracts, the DOL Wage and Hour Division (WHD) makes area-wide wage determinations regarding wages and fringe benefits based on Bureau of Labor Statistics Employment Cost Index data.

The SCA monetary wage must be paid in cash and cannot be satisfied by fringe benefit services. The required SCA health and welfare amount is currently $4.27 per hour; this amount can be paid in benefits, cash equivalent of benefits, or both. Health coverage is one type of fringe benefit that may be provided to satisfy SCA requirements.

What are the DBA’s general wage and fringe benefit requirements?

The DBA generally requires that workers employed on federal construction contacts greater than $2,000 be paid prevailing wages. Under laws known as the Davis-Bacon Related Acts, the DBA’s requirements also apply to construction projects that are assisted by federal agencies through grants, loans, loan guarantees, insurance, and other methods.

The DBA and the Davis-Bacon Related Acts (collectively, DBRAs) require that covered workers receive a prevailing wage which is both a basic hourly rate of pay and any fringe benefit services found to be prevailing.

The WHD makes DBRA wage determinations, including fringe benefit determinations, based on locally prevailing wages. Under the DBRAs, a covered employer can satisfy its basic hourly rate obligation by paying fringe benefits. Health coverage is one type of fringe benefit that may be provided to satisfy DBRA requirements.

What are the employer shared responsibility provisions?

Under the ACA, the employer shared responsibility provisions require an employer with an average of at least 50 full-time employees (including full-time equivalent employees) during the previous year (an applicable large employer or ALE) to:

offer its full-time employees and their dependents health coverage that is affordable and provides minimum value; or

pay the Internal Revenue Service (IRS) if the employer does not offer this coverage and at least one full-time employee receives the premium tax credit for purchasing health insurance through the Exchange.

For a calendar month, a full-time employee is defined as a person employed on average at least 30 hours of service per week or 130 hours of service per month. An ALE is not required to offer health coverage to part-time employees to avoid an employer responsibility payment.

An employer may be subject to one of two types of payments, but not both types of payments.

An ALE is subject to an annual payment of $2,000 (adjusted for inflation to $2,160 for 2016) for each full-time employee (after excluding the first 30 full-time employees from the calculation) if the ALE does not offer minimum essential coverage to at least 95 percent of its full-time employees and their dependents and at least one full-time employee receives the premium tax credit for purchasing health insurance through the Exchange.

An ALE is subject to an annual payment of $3,000 (adjusted for inflation to $3,240 for 2016) for each full-time employee who receives the premium tax credit for purchasing coverage through the Exchange. The amount of this payment can never exceed the potential amount of the employer shared responsibility payment described in item 1 above.

How does an employer meet the ACA and either the SCA or DBRAs requirements?

An employer subject to the ACA and either the SCA or DBRAs must comply with each law. The ACA does not alter or supersede the SCA or DBRAs. Each of the laws is separate and independent.

As a practical matter, an employer subject to each of these laws must satisfy all the requirements of each applicable law. For instance, an employer who is in compliance with the ACA’s employer shared responsibility provisions may not necessarily be in compliance with the SCA’s or DBRA’s provisions, and vice versa.

Employee Health Benefits and Opting Out

Opt-out payments or cash in lieu of employee health benefits and other benefits have been a staple in the employee benefits industry for many years. Employers offer individuals who are eligible to enroll in their group health plan a sum of money, typically paid monthly, to those who waive enrollment in the group health plan. Employers who offer group health plans often use opt-out payments to share the savings they receive when an employee chooses not to enroll in the benefits offered.

These opt-out arrangements can take two different structures:

Conditional opt-outs require the employee to satisfy a condition in order to receive the opt-out payment. Typically the condition is proof of other group minimum essential coverage (MEC).

Unconditional opt-outs are offered to all employees and simply require the employee to waive coverage under the group health plan.

For many years, so long as employers were offering opt-outs uniformly to all benefit-eligible employees, the government had little, if any, regulation over opt-outs. However, beginning in 2015, multiple government agencies began tightening the parameters around permissible opt-outs and, in some situations, appear to restrict them completely. Employers are experiencing increased scrutiny over opt-outs from various agencies because of recent regulatory guidance.

As multiple government agencies are tightening the parameters around permissible opt-outs, many employers have been dropping opt-outs before they become a compliance problem. In fact, according to the UBA 2016 Health Plan Survey, only 2.8% of employers offered a bonus to employees to waive medical coverage in 2016, a 20% decrease from three years ago. But for those that do, the bonus amount is on the rise. The average annual single bonus in 2016 is $1,884, a 12% increase from last year.

ACA FAQ

The Patient Protection and Affordable Care Act (ACA) imposes a penalty on “large” employers that either do not offer “minimum essential” (basic medical) coverage, or who offer coverage that is not affordable (the employee’s cost for single coverage is greater than 9.5 percent of income) or it does not provide minimum value (the plan is not designed to pay at least 60 percent of claims costs). A large employer is one that employed at least 50 full-time or full-time equivalent employees during the prior calendar year. To discourage employers from breaking into small entities to avoid the penalty, the ACA provides that, for purposes of the employee threshold, the controlled group and affiliated service group aggregation rules will apply to health plans. Essentially, this means that the employees of a business with common owners or that perform services for each other may need to be combined when determining if the employer is “large.”more

The aggregation rules are very complicated and may require a large amount of information to do an accurate analysis. This article does not address all of the possible considerations or all of the intricacies of the rules, and assumes that the regulations that apply to retirement plans will also apply to health plans. We strongly encourage employers with complex arrangements to consult with their attorney or accountant.

Controlled Group

When one business owns a significant part of another business, there may be a “controlled group.” There are four types of controlled groups – parent-subsidiary, brother-sister, combined, and life insurance.

Ownership includes:

Stock ownership in a corporation

Capital interest or profits in a partnership

Membership interest in an LLC

A sole proprietorship

Actuarial interest in a trust or estate

A controlling interest in a tax-exempt organization (80 percent of the trustees or directors are also trustees, directors, agents or employees of the other organization or the other organization has the power to remove a trustee or director)

A government entity, including a school, if there is common management or supervision or one entity sets the budget or provides 80 percent of the funding for the other.

Affiliated Service Groups

If the company regularly performs certain types of personal services or management functions with or for related entities, it may be part of an “affiliated service group” even if there is not common ownership.

An affiliated service group is basically a group of businesses working together to provide services to each other or jointly to customers, and can be one of three types:

A-Organization (A-Org), which consists of a First Service Organization (FSO) and at least one A-Org

B-Organization (B-Org) which consists of an FSO and at least one B-Org

Management groups

Only entities that provide personal services are subject to the affiliated service group rules. Attribution rules similar to those that apply to controlled groups apply to affiliated service groups.

Group Medical Coverage Explained

Small employers looking for ways to control their group medical coverage costs are more closely examining what it means to be “fully insured.” These days, employers with as few as ten full-time employees are exploring other funding arrangements which can allow them more control—or at least more accountability—over their annual premium increases.

Fully Insured

“Fully insured” is what most people mean by “insurance.” The individual, or his employer, pays a premium to the insurance carrier for group medical coverage; in return, the insurance carrier is responsible for paying future medical claims that are:

1) Covered in the insurance policy’s contract (thus usually excludes cosmetic or other elective procedures).

2) Beyond a certain annual “out-of-pocket maximum,” which is the total amount an individual or family will pay up front for medical services. For instance, an annual deductible amount, or the individual’s share of a coinsurance percentage such as 80/20.

The financial risk for future medical claims, then, is almost entirely the insurance carrier’s. Beyond that out-of-pocket maximum—for instance, $5,000—it doesn’t matter whether an individual incurs a $13,000 appendectomy or $300,000 respiratory failure, or a combination of medical procedures in a given year; the insurance carrier has contracted to pay all claims, and not charge any more for monthly premiums during the term of the contract (typically at least one year).

Now, because an insurance carrier must obey simple math in order to function, it needs to bring in at least as much premium as it costs to pay the incurred medical claims (and the employees of the insurance carrier often want to take home paychecks, too). If, therefore, the cost of providing medical services increases—or, by actuarial calculation, is likely to increase—insurance carriers offer individuals or employers increased premium rates at the beginning of their next contract year for their group medical coverage, and those individuals or employers are free to accept those new premium rates or to shop around with other insurance carriers. Regardless of whether the individuals or companies stay with the same insurance carrier, the medical claims already incurred are the insurance carrier’s responsibility to pay.

The idea of “pooling” has always been a part of fully insured coverage as well. In simple terms, if ten people are insured, the insurance carrier’s goal is to make sure that the premium collected from all ten covers the claims incurred by all ten, not necessarily that the premium collected from each individual covers that individual’s claims. Up until the enactment of the Affordable Care Act, insurance carriers could put a higher price tag on the group medical coverage offered to individuals and small employers with higher risk (existing sicknesses or other conditions) to cover the higher expected claims; now, the ACA mandates that, for individuals and small employers (under 50 full-time employees), insurance carriers use “community rating,” which equalizes the premiums charged to all in a certain geographic area for a certain level of service. Insurance carriers can still charge more by age—small-group coverage for a 21-year-old is usually much cheaper than that for a 61-year-old—but a sick 61-year-old and a healthy 61-year-old would pay the same amount for coverage with the same deductibles and out-of-pocket maximums.

The benefit of community rating is that individuals and companies with a large number of health conditions can find group medical coverage which is not priced completely out of their range. However, small employers with few health risks are finding that not only have their premiums increased by amounts greater than their own use of the insurance benefits would justify, but there is no benefit to them in prudently trying to control costs (via wellness plans or other initiatives), as their own efforts to reduce claims would only be drops in the huge bucket from which renewal increases are calculated.

Self-Funding

Self-funded insurance is almost the complete opposite of full-insured coverage. A self-funded insurance plan is exactly what it says: A company provides all the funds to pay for expected claims (with an important caveat—see “Reinsurance/Stop-Loss”section). In essence, the employer has formed an “insurance pool” all of his own, with the participants in the pool consisting only of his employees.

Reinsurance/Stop-Loss

Because even larger groups can incur greater than expected claims, most self-funded insurance plans still have a form of insurance in place, alternately called “reinsurance” or “stop-loss insurance.” These employers will pay a premium for protection in case their actual claims exceed, for example, 125% of actuarially predicted expenses, or in case a single large claimant incurs claims large enough to skew the entire “pool.” Typically, even employers with several thousand employees will have stop-loss to hedge their bets against the unexpected—which is really what insurance is for.

Self-funding is generally NOT an option for small employers, due to the nature of statistics. If you have 500 employees, you can estimate with fair accuracy the general level of claims you can expect to be incurred, and the probability of any specific large claims (systemic cancer, serious accidents, etc.). As the number of employees goes up, the accuracy of such statistical estimates goes up. As the number of employees goes DOWN, not only does the predictability of any individual large claim go down, but the ability of the “pool” to compensate for any one large claim goes down. If you have five employees and are funding their healthcare expenses to expected levels, it only takes one stroke or one high-risk pregnancy to incur expenses far beyond what you had planned for.

It is very much in the interests of a self-funded insurance plan to minimize claims, as all costs come out of the company’s pockets—and conversely, all savings benefit the company’s bottom line. Thus, wellness programs, biometric screenings, in-house exercise programs, and smoking cessation incentives can often be found at these companies, supplied and encouraged by well-motivated management.

Self-funded insurance plans are set up with the assistance of professional actuaries who can help determine reasonable levels of funding from year to year, and third-party administrators (TPAs) who provide the mechanics of claims payment to providers, and often contract with an existing insurance carrier for the use of their network.

Level-Funding

Level-funding has recently attracted far more attention among larger small employers (those nearing 50 full-time employees) or smaller large employers. At its simplest, level-funding is simply self-funding done small, usually by an office or offshoot of a fully-funded insurance carrier. With some level-funding providers offering their services to companies down to 10 full-time employees, these plans obviously can’t operate under the kind of risk possible with a larger company; the stop-loss coverage comes into play at a much lower threshold, protecting the company from unforeseen huge claims. These plans are often thus referred to as “partially self-funded.”

Because self-funded and level-funded plans, even for small groups, don’t need to be community rated as fully insured plans do, a level-funded plan can cost less to provide health benefits to the employees, and save the company money… but only if the cost of its claims stays low so that the cost-per-employee doesn’t rise as high as, or higher than the community-rated premiums available to them. In other words, only a company of healthy individuals (who will need to attest to their health status by individual health questionnaires when applying) should consider level-funding.

What Does This Mean For YOUR Group Benefits?

As always, insurance is a balance between costs and risks. A fully insured plan removes most risk from the employer and employees, but the guaranteed cost of the group medical coverage plan is higher. A self-insured plan leaves most of the risk with the employer, but also has the greatest chance for savings. Level-funding attempts to combine the best of both worlds, but is really only viable for a narrow segment of employers. There is no one “right” answer to which funding arrangement is “best”—if there were, there would only be one way to fund an insurance plan, not three.

How many employees do you have? How healthy is your employee pool? How much variation in your premiums can you accommodate, year to year? How much input into benefit design do you want to have (or want to HAVE to have)? Together with our office, sit down and discuss these questions to find out which kind of insurance funding best meets your needs.

HR Assistance for ICE and SSA

Reports submitted to the U.S. government that include both names and Social Security numbers (SSNs), such as 1095 and W-2 forms, are filtered through U.S. Immigration and Customs Enforcement (ICE), a division of the Department of Homeland Security (DHS). In some cases, employers will receive a No-Match Letter or an Employer Correction Request from the Social Security Administration (SSA) for certain employees. ICE will send a similar letter (the Notice of Suspect Documents) after inspection of files during an I-9 audit when discrepancies are noted.

A mismatch should not be used to take adverse action against an employee, as it may violate state or federal law. It is, however, incumbent on employers who receive such notices to investigate, remediate, and communicate identified errors within established timelines. ICE’s “safe-harbor” procedures include the process employers should follow to resolve questions of worker identity and eligibility to work. These steps, if followed, can eliminate the possibility that a no-match letter can be used as part of an allegation that an employer had constructive knowledge that unauthorized workers were employed in its workforce.

An employer who knowingly ignores facts and circumstances that would lead a person, through the exercise of reasonable care, to determine worker eligibility may incur penalties of $216 to $2,156 per employee, with additional aggregate fines up to an additional 25 percent.

“Actual” knowledge means that an employer willfully employed a worker knowing that the person was ineligible to work.

“Constructive knowledge” occurs when an employer fails to attempt to resolve no-match situations through inquiries, or to take appropriate action within a reasonable time. An employer may also be found liable for constructive knowledge if it ignored indicators that called employment eligibility into question.

The following actions should be taken upon receipt of a no-match letter.

Step 1: Review Records

Employers should check their records to determine if the discrepancy is a clerical error, such as typographical and transcription errors and name changes due to marriage. If this is the case, the employer with HR assistance, should:

Correct its records. All changes to Section 1 of the I-9 form must be completed by the employee, by drawing a line through the incorrect information and writing in the accurate data. If the employee is no longer employed, no correction may be made. An employer can update Section 2 of the I-9. Documents used to verify eligibility to work in the U.S. and identity must meet acceptable requirements of the form in effect when the I-9 was initially completed.

The employer should verify that the updated information matches government records. A free verification service that confirms names and SSNs is available through the Social Security Administration’s Business Services Online.

Once verified, the employer should draft a memo that details the manner, date, and time of the verification and attach a signed copy to the employee’s I-9 as well as notify the respective agency of those changes.

ICE’s safe harbor provisions allow the employer 30 days from the receipt of the letter to resolve questions.

If the employer is not able to resolve issues identified by the respective agency, it should promptly request that the employee confirm that the employer’s records are correct. A sample employee communication is available at www.ssa.gov/employer/sampleltr.doc.

If the employer’s records are not correct, it should (in accordance with the agency letter’s instructions) verify the corrected records if new documents are presented, and report the changes to the agency.

The employer should also correct its records. An employer may use Section 3 of Form I-9, or, if Section 3 has already been used for a previous reverification or update, it may complete a new Form I-9. Minimally, page two of the original I-9 should be maintained in addition to the new I-9.

If the employee responds that the records are correct, the employee should be instructed to pursue the matter personally with the SSA and notify the employer of any changes.

Once again, the safe harbor provisions allow the employer 30 days from the receipt of the letter to resolve discrepancies.

A discrepancy will be considered resolved only if the employer, with or without HR assistance, can subsequently verify with SSA that the SSN and name match or with DHS that documents used to verify eligibility are valid.

In the event the requirements of the no-match letter are not met, download UBA’s free Compliance Advisor, “Employment Eligibility: How to Handle Questions about Worker Identity” for information on two courses of action available to employers.

Diabetes is an expensive disease for health care plans: $322 billon in America! Costs are compounded because diabetes is the leading cause of heart disease, stroke, kidney disease, lower limb amputation, and blindness, and also has connections with some cancers, arthritis, gum disease and Alzheimer’s disease. To add some perspective, consider these facts: Today, 3,835 Americans will be diagnosed with diabetes. Today, diabetes will cause 200 Americans to undergo an amputation, 136 to enter end-stage kidney disease treatment, and 1,795 to develop severe retinopathy that can lead to vision loss and blindness.more

Nearly 30 million Americans have diabetes and 86 million have pre-diabetes. While Type 1 diabetes presents suddenly, Type 2 diabetes is known as a silent killer. One can have it for years before displaying symptoms but, during that time, damage is occurring throughout the body. For that reason, prevention or early diagnosis of diabetes is imperative. In Vital Incite’s benchmark data of just under 12,000 individuals with A1c values who have not been diagnosed with diabetes, 8 percent of those individuals had A1c values greater than 7 percent. Those values indicate uncontrolled diabetes, but these individuals were not yet diagnosed. In order to reduce risk, and reduce disease burden, the goal is to control diabetes in its early stages so it does not progress. Yet, in examining the control of A1c values, we find that more than 39 percent of diabetics have A1c values that are not controlled.

Using the appropriate resources to control diabetes is critical because, as risk increases, cost also jumps for health care plans. More importantly, these individuals experience a significant reduction in their quality of life.

According to Carol Dixon, Regional Director for Community Health Strategies at the American Diabetes Association Indiana, the American Diabetes Association offers many free resources to support you in providing better health care plans.

Wellness Lives Here℠ (wellnessliveshere.org): With year-round opportunities, Wellness Lives Here will help your organization educate and motivate employees to adopt healthful habits and you should incorporate employee wellness benefits, too. For some, it means fewer sick days and higher productivity. For others, it means looking and feeling better. For everyone, the result is empowerment—Americans who are better able to control or prevent diabetes and related health problems.

Wellness Lives Here resources include:

Engagement with the local American Diabetes Association office for lunch and learns and health fairs

Stop Diabetes @Work – Handouts on many health topics that can be co-branded, monthly newsletter articles to communicate healthy lifestyle messages, and a multitude of resources to integrate health into the corporate culture

Mission Engagement Days – Specially designed, easy to use toolkits are provided, including Get Fit, Don’t Sit Day (May), and Healthy Lunch Day (November)

Health Champion Designation – This special recognition goes to organizations that inspire and encourage a culture of wellness.

The CEO Leadership Circle brings together invited executives for the opportunity to work jointly with the local Association office toward specific health goals and objectives for their company.

To understand legal requirements for wellness programs, request UBA’s ACA Advisor, “Understanding Wellness Programs and Their Legal Requirements,” which reviews the five most critical questions that wellness program sponsors should ask and work through to determine the obligations of their wellness program under the ACA, HIPAA, ADA, GINA, and ERISA, as well as considerations for wellness programs that involve tobacco use in any way.

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